When Stephan Stoss arrived in Sanya, China, six years ago, little more than lush foliage lined the roads leading to the 492-room Hilton where he is now general manager.
Few other international hotels had been built along the town’s picturesque bays. Stoss and his colleagues from those that were operating would meet regularly for dinner around a small table.
Today, they would need a banquet hall. St Regis and MGM hotels have joined the Hilton on a stretch of white-sand beach on Yalong Bay. Elsewhere in Sanya, Hyatt, Westin, Shangri-La and other prominent chains have built properties. Hilton alone has three hotels in town.
Illustration: Lance Liu
Those once-quiet streets around the Hilton are clogged with tour buses. Upscale apartment blocks and gated communities of US multimillion-dollar villas have replaced the wild brush.
“The speed things go here, you don’t have that in any other destination,” Stoss said. “Only China.”
Against the backdrop of China’s slowing economy, tourism is a bright spot. Many Chinese families are still getting wealthier, and spending that extra income on travel.
Groups of Chinese tourists are already a common sight, from New York’s Times Square to London’s Buckingham Palace to Cambodia’s Angkor Wat. However, a bigger part of the travel story is the boom within China. Last year, Chinese tourists took 4 billion domestic trips, twice as many as in 2010 and significantly more than the 122 million journeys abroad, according to government data.
The government has been encouraging Chinese families to pack up and go. As the economy’s traditional export and investment engines have been slowed by feeble demand and excess factories, policymakers are trying to shift toward services and consumption.
Tourism is central to that transition. The government hopes China’s swelling middle class will spend more on leisure and entertainment to create jobs in hotels, airlines and restaurants.
“Here it is becoming more important for people to have quality spare time and they are willing to pay for that,” Stoss said.
Beijing is counting on travelers like Leng Zhichen, 28. Leng, an entrepreneur from Qingdao in Shandong Province on the east coast of China, travels with his wife and two-year-old daughter nearly every month, often for long weekends and usually within China.
“I like to spend more time with my child and have her experience different places,” Leng said as he relaxed in the Hilton’s lobby.
Despite the economic downturn, his income is surging — up tenfold in three years to 3 million yuan (US$450,000). With more disposable cash, he spends several times as much on hotels and meals as he previously had.
“My travel has changed since I had a family,” said Leng, who runs his own jewelry brand. “I stay in nicer hotels and eat better-quality food.”
Hainan, the island province that includes Sanya, is at the center of the government’s push.
In 2009, the national government designated Hainan for development as an “international tourism island” and unleashed a torrent of investment to support its travel industry. A high-speed railway that zips around the island was completed last year, and a new airport for Sanya is on the way. Private investors poured money into expensive golf courses, luxurious hotels and rows of vacation homes.
On Sanya’s beaches, crowded with frolicking children, worries about China’s economy seem a distant mirage. Last year, tourist arrivals in Sanya neared 15 million, almost 70 percent more than five years earlier. Ninety-eight percent of the visitors were Chinese.
Revenue from tourist businesses more than doubled over that time, to 30 billion yuan last year. It helped drive Hainan’s overall growth, with the province’s economy up 7.8 percent last year, substantially faster than the 6.9 percent nationally.
However, not all is perfect in paradise. When the government selects one sector for support — whether steel or solar panels — it often helps contribute to undue exuberance among investors, resulting in wasteful projects that depress the economy.
In Hainan, the excitement over tourism has left the island littered with more golf clubs, apartment buildings and hotel suites than even the rising tide of travelers can fill. The number of hotel rooms in Sanya has increased 40 percent in only five years.
The boom in hotels has created such cutthroat competition that room rates have dropped about 30 percent in three years, Stoss of Hilton estimated.
“It is becoming harder and harder” to maintain revenue, he said.
Too many golf courses are chasing too few golfers as well. Lured by the increasing tourist traffic, investors opened eight golf courses in Sanya, many of them with luxurious clubhouses catering to rich Chinese.
However, Chinese President Xi Jinping’s (習近平) anti-corruption campaign has scared government officials and state enterprise executives away from the game, seen by many in China as a sport for the well-heeled. The high season for golf, during the cooler winters, is only about four months long, leaving the courses scrambling for customers the rest of the year.
“Most golf courses are losing money,” Sanya Luhuitou Golf Club general manager Dai Yuying (戴玉應) said, adding that his tournament-quality course is managing to break even.
“The number of people who play golf has decreased a lot,” he added.
Too many vacation homes are roasting empty in the Sanya sun. The local property association estimated that it would require nearly four years to find buyers for all of the unsold residences on the market.
While the pace of expansion has slowed somewhat, developers are still building.
Yalong Bay Development Co marketing director Lu Keyong (盧克勇) said his firm remained convinced that more tourists would bring more homebuyers. The company is building more apartments near Sanya’s airport.
“Accommodation is a necessity for people,” Lu said.
The government is prodding investors to do more than throw up hotels and apartments. Officials said it had become harder to get state permission to build hotels.
Instead, they are encouraging investment in projects with a wider range of entertainment options. One hotel complex, Kerzner International’s US$1.6 billion Atlantis, will have water slides, exhibits of marine life and event halls when it opens next year.
“There is only one thing I worry about in the long term,” Sanya Tourism Association secretary-general Zhao Kuan (趙寬) said. “We need to diversify the attractions.”
The jammed restaurant at the Grand Metropark Resort near the Hilton offers reason for optimism.
At one table, Chen Hong, 32, slurped up a morning bowl of noodles with her sister, sister-in-law, parents, nephew and five-year-old son. Chen, from Xuzhou in eastern China, was on her first trip to Sanya, and said she wanted to take a lot more vacations like this one.
Her husband’s income as a civil servant has increased in recent years and so has their interest in travel. They aim to take one long vacation a year, especially since they see it as important for their child.
“I think travel should broaden his horizons,” she said.
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